TCS signs five-year contract with Volkswagen Group

India’s largest information technology (IT) firm, Tata Consultancy Services (TCS), has signed a five-year contract with UK-based automobile maker Volkswagen Group to deliver IT transformation and support services.

TCS will support Volkswagen in its business transformation programme to meet its aim to “sell more cars, sell more parts, drive down costs”. The IT major will support all the brands — Audi, SEAT, Škoda, Volkswagen Passenger Cars and Volkswagen Commercial Vehicles — within the group as they move to a consolidated, standardised business platform. This will increase the geographic mobility of Volkswagen Group’s UK employees, increase flexibility and lead to cost reduction. The company did not disclose the deal size.

This is the first time Volkswagen has implemented an onshore-offshore model for its IT systems.

This shows the continued focus that TCS has in the UK. Revenue contribution from Continental Europe for FY09 was 40 per cent.

Analysts believe the move is part of vendor consolidation. “Understandably, we’re seeing an increasing focus on consolidation and cost optimisation in the current economic climate. Companies with global operations and disparate brands need to think about streamlining their operations the way Volkswagen is doing,” said Duncan Aitchison, partner & president, TPI.

For TCS, the Volkswagen Group is yet another client in its growing auto segment. The IT major already does work with Nissan, Ferrari, Chrysler and Ducati. The automotive industry has been one of the focus markets for TCS and is part of its manufacturing vertical.

“In this challenging environment, organisations are looking to increase efficiency and flexibility to stay competitive. By helping Volkswagen Group, UK, consolidate its IT systems onto a single platform, we are not only streamlining its infrastructure but also its wider businesses processes,” said AS Lakshminarayanan, vice-president and head of TCS’ Europe operations.